Timmy elsewhere

At the ASI:

We’re going to have to tax middle aged women having unprotected sex

And at Forbes, a response to Frances Coppolla:

To Continue About The Sharing Economy Producing Economic Growth

For look at what happens. We have a rise in output: one more hole has been drilled (along with exciting amounts of medical care having hit the mains). The amount of labour that has been used is exactly the same whether a new drill was purchased to drill it, an old one was rescued from its slumber in that household or one is rented from its slumber elsewhere. However, by renting the drill we have not had to manufacture a new drill to make the hole (and the lovely emergency room visit etc). We have instead been able to use a piece of already extant capital to make the hole.

And thus so has the Solow Residual risen. Because we now have an increase in output (one more hole), using the same amount of labour we ever would have used, but without having to increase capital inputs into the economy. This is the very definition of a rise in the Solow Residual: thus the sharing economy creates economic growth.

QED.

18 thoughts on “Timmy elsewhere”

  1. Bloke in North Dorset

    Tim,

    You need too figure out* how to get all your “elsewhere’s” into a sidebar category.

    * yes I know that probably means finding someone technical to do it for you 🙂 but count me out, I don’t know WP well enough

  2. I’m wondering if Frances Coppolla doesn’t understand the sharing economy because people like her never have anything to share with anyone she knows needs sharing with. (Odd for a music teacher)
    Your drill example chimes with me because, like anyone in the building trade, I’ve a wealth of tools & equipment. Most of which sits idle, for most of its time.
    So I lend it to people I trust not to lose, abuse or “forget” to return it. OK there’s a depreciation cost to me. But that’s far outweighed by the benefits of the good will resulting.
    Because, on the being shared with side of the balance sheet,there’s a whole lot being done that wouldn’t otherwise be done. Or would be done, but in a far less efficient manner.
    ie I have a circular saw that’s sole purpose is to remove material from the bottom of a door without un-hanging it. It’s a common tool in the carpet fitting & wood flooring trades; it’s for the latter I bought it. Taking off & refitting a door can be an hour or more’s work – think hinge screws buried under layers of paint & rusted in. The making good required, afterwards. Whoosh & two minutes. So it’s raising productivity for the user. And because it’s raising productivity for the user, they get to be more competitive in their quotes. And somewhere along the line, they’ll be getting jobs because their quotes accepted for jobs that, otherwise, the punter wouldn’t have done. For wood flooring, that’s the fitter but also the wood flooring supply industry (And their bloody accountants, when their books get done, no?)
    The good will I get back? Well I get to borrow other blokes’ tools. But there’s also all the jobs get sent my way that they don’t tackle. Because that’s the way they pay the “hire charge.” And that’s why I might lend it to you to fix that door, always drags. The one you’d never get a tradesman in to fix. Because I might just need a good deal on half a ton of scandium, one day. Or input from one of your Portuguese pals on the requirements for swimming pool fences (remember? 🙂
    What goes around, comes around & we all get wealthier.
    That’s production, where i come from. But no balance sheet entries & no bloody taxman. Which may be the problem with balance sheet economists, no? If they can’t itemise it it doesn’t exist.

  3. Bloke in North Dorset

    Philip,

    No, that’s a category and only appears when Tim posts about it here. I mean a sidebar that has a link to other work whether or not he posts about it here.

  4. The problem seems to me that she has a “why on earth would anyone want to?” perspective, rather than a “would someone?” perspective.

    The last article is full of this:-

    “Now, let’s look at how this applies to the “sharing economy”. If, on top of my day job making widgets, I add a couple of hours driving for Uber in the evening, I have increased my working hours. You can say that I produce more, since I now produce taxi rides as well as widgets. But I have not increased my productivity. I can only do one job at a time, and I can only drive one car at a time.”

    And what if someone is a freelance bloke who works on the rigs, or a freelance entertainer who has lots of spare time? I knew a freelance software guy who had an HGV license so when he didn’t have software work he would go and drive a truck.

    “Similarly, driving my car for money has a cost, in higher insurance, higher maintenance bills, valeting charges and faster depreciation: if the returns from driving my car are insufficient to cover the costs, including the opportunity cost mentioned above, it is not worth my while to put in the extra hours driving for Uber.”

    If I had a reasonably new car, putting more mileage on it is something I’d hardly blink about because extra servicing and parts cost sod all per mile. If you get it serviced for every 10,000 miles, that’s less than 5p per mile, and Uber pay something like £1 per mile to drivers.

    “What would my passengers do, if they didn’t take a ride in my car? “Sharing economy” advocates usually claim that passengers share my car instead of using their own, for journeys they would have made anyway. Clearly there is no additional factor productivity in this case. They ride in my car while their own sits idle. It’s a wash.”

    Maybe they want to have a drink.

    “If the passengers in my car would have made the journey anyway by some other form of transport, then again it is a wash. Their bicycle stays at home while they ride in my car. Or there are empty seats on the bus, or the train. We have simply displaced passengers from buses, trains and bicycles to taxis. It is hard to see how this can be regarded as an increase in TFP. It may be more convenient for the passengers – which might mean a marginal productivity improvement for them, since they can get to work more easily. But against this must be put the increase in congestion on the roads. Buses and trains are a considerably more efficient way of moving people around than cars.”

    Well, not at 8pm in Birmingham they aren’t, when you’re stood waiting half an hour for a commuter train.

    “There is perhaps a more obvious TFP benefit here, since someone renting my spare bedroom for a night doesn’t stop me doing other productive work, and it probably doesn’t materially change the value of my house. But there are still costs of production – cleaning, maintenance, insurance. The return on capital has to be high enough to cover these, or it isn’t worth it.”

    Pushing a vacuum around and dusting the spare room? About 10 minutes labour. If you’re charging even £20 a night, that covers it.

    “Only if the availability of my spare bedroom entices people to spend a night away from home that they otherwise would not have done, can we say that there is a TFP increase. Again, we are looking at marginal effects.”

    Maybe (although I know people who opt to stay away in AirBnB and catch a cheap flight the next day) But so what? It’s still growth. And most growth is marginal – it’s the accumulation of all those tiny droplets that makes a wave.

  5. Buses and trains are a considerably more efficient way of moving people around than cars.

    This ain’t true anyway. Since all our mechanised transport is based on engineery things like power-to-weight ratios, they have similar efficiency unless you do something really stupid like build a flamethrower on to the roof. What is inefficient is empty seats. So yes, trains are extremely efficient — when they’re full. But it is impossible to run a train service that consists entirely of full trains. By its very nature, any train service will always mostly consist of mostly empty trains. It is erroneous to compare the efficiency of trains to that of cars without taking that into account.

    I was quite surprised to hear a spokesman for Friends Of The Earth explaining that cars are near-enough as efficient as trains, as long as you fill them. It’s five-person cars with one or two people in them that are “bad for the environment”. Five-person cars carrying five people are fine.

    And even that’s only in terms of fuel per journey. You could increase efficiency by that measure by having each household have, say, three different sizes of car to use for different types of journey. Pretty sure the fuel efficiency gain would be offset by other factors there.

  6. How the blazes did we end up with a shortage of 2,600 midwives? It’s the more pleasant end of nursing (birthing babies is better than changing old people’s nappies), the pay and conditions are good, and so on. There’s even a TV drama about how great it was to be a midwife in the 1950s.

    Of course we know it’s all down to the restriction in the number of training places. But why the hell does this persist? Is nobody in government capable of putting two and two together?

  7. BiND: Ah, gotcha. An RSS feed widget-y type thing would probably do the job, provided it’s possible to subscribe to Tim’s other work (and only Tim’s work) by RSS.

  8. Squander Two,

    “But it is impossible to run a train service that consists entirely of full trains. By its very nature, any train service will always mostly consist of mostly empty trains. It is erroneous to compare the efficiency of trains to that of cars without taking that into account.”

    It’s why the whole “we should all use the train more” is nonsense. Trains serve a purpose in moving around commuters and reducing some congestion in the day time and not much else. When they cancelled the Swindon to Oxford direct service, there was outrage from the normal groups until the transport minister pointed out that putting every passenger in a taxi would be more environmentally friendly.

    I’ve been on trains home after a night out in London and it’s me and a couple of drunken city boys in the carriage. There’s no staff around because it’s not even worth collecting the odd fare from the odd person who hasn’t paid (and they only run those trains to have them in Swansea the next day for the commuter run back to London).

  9. “How the blazes did we end up with a shortage of 2,600 midwives?” Aren’t there some figures coming out this week showing they’ve been lying through their teeth about projected immigrant numbers?

    On the subject, the French introduced me to a nice bit of peer-to-peer. “blablacar.” There’s a dot-fr & a dot-es & even a dot-co.uk. Although how that’ll square with UK law on paying passengers, i don’t know.
    I think I’ll use it for the drive down to the CdelS. Not a door to door. The suggested contribution is higher than the cheap airfare, so unlikely any takers. And I’ve people to see, all the way down. But point to point.
    The money’s immaterial to me. But it’ll be nice to have some company for the long transits. And hitch-hikers are a no-go. (That leggy blonde with the thumb out’s got grief written all over her.) Lot of entertainment value accruing to me.
    And I really am a believer in the “what goes around comes around”. I’ve been doing it most of my life & I’m way, way on the credit side of the transactions. A lot of the things I’ve made money from had their origins in giving someone a helping hand. The more you’re out there, the more chance you have to luck into something & you accumulate credibility. Almost bankable, is credibility..

  10. And hitch-hikers are a no-go.

    I’ve picked up a few, you can spot the dodgy ones a mile off. Just look at how they’re dressed and what they’re carrying for luggage. I picked up a bloke alongside Lake Annecy back in August, who I actually went past and then doubled back to pick him up. After a few miles trying to understand his French, and he mine, it turned out he was Polish and spoke English.

    And I really am a believer in the “what goes around comes around”.

    So am I, which is why I pick up hitchhikers. 🙂 I always used to get annoyed that the blokes in nice cars on their own would never pick you up, but a van full of people or a little old lady in an antique would. So now I am a bloke alone in a nice car, I usually pick people up. Not that you see them very often.

  11. I’m just getting a bit wary, Tim. I’ve a couple of times stopped for lone hitchers, then two more have popped out of nowhere. And got in front of the car. (Maybe they’re under the mistaken impression I wouldn’t run them over, taking off. Wouldn’t bother me in the slightest.) Why I’d be scared of the leggy blonde. Set up stuff..Bloke on his own in a nice car is the preferred target.
    And I’m perfectly aware of the amount of car-jacking goes on in London.

  12. A thought on the blablacar thing. There’s going to be a whole load of value created there. People without much money chatting with successful blokes in nice cars. How many of them are going to be meeting backers for rewarding little endeavors, they’d never get near in the ordinary way? Have hours on end to make their pitch instead of two minutes.
    And they’ll be coming recommended. How the thing works. Everybody leaves reviews on everyone else. Good review score raises the likelihood of getting a ride/passenger.

  13. I like Coppola Comment. At least it’s stimulating thinking, and not based on trawling newspapers looking for gloom stories or if they can’t be found stories of impending gloom.
    In a long post there’ll always be an outrageous claim, and the one about this being creeping communism was interesting. I’ve dealt with some benefit admin for some new Uber drivers in West London recently. They’re affected by the lower benefit cap next April, so are coming off JSA and registering as self-employed drivers which avoids the cap. Don’t ask how they can afford the car in the first place. At first I thought the communism jibe might be a fair one as they’ve been cajoled into this option of being a self-employed driver.
    Then again, they could easily avoid the new cap by remaining on JSA and moving somewhere properly affordable like Merthyr or Accrington. But they won’t as they are either up their own backsides about the world being rubbish outside London, or they’ve got an illegal sublet going on, or they’re holding out for eligibility for right to buy.
    Withdrawing incentives modifies behaviours just as much as granting incentives.

  14. Andrew Carey,

    “But they won’t as they are either up their own backsides about the world being rubbish outside London”

    I never understand this. At one time, sure, London was the only place you could get decent Parmesan or see a Woody Allen film, and you could get cheap hifi down the Tottenham Court Road, but you get Parmesan in every Asda in Birmingham. And better curries.

  15. Seems to me that Uber is a bit different to AirBnb, tool sharing (and blablacar). There are similarities but Uber isn’t as clear a capital efficiency gain.

    With Uber the owner is also the driver so the wins are in the convenience to the consumer and the price. Both of which go up compared to the alternate options which is why people love using uber. Yes there some increase in total rides taken because uber is more convenient public transport and cheaper than a taxi but for the most part what uber is doing is putting the overly regulated rent-seeking taxi market out of business. In a sane world taxi/minicab companies would have done the uber thing themselves

    Airbnb etc. do not require anything like as much additional labor by the service provider. You tidy up the room and clean the sheets, you dust off the drill and make it clean, you drive a couple of miles off route to pick up the blablacar rider. All these are minimal compared to be massive increase of usage of a capital asset and hence is a clear increase in productivity

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